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Wellness hotels post robust global performance led by upper upscale properties, survey finds

  • HOTELSMag.com
  • 13 June 2024
  • 3 minute read
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This article was written by HotelsMag. Click here to read the original article

The wellness sector has been growing at an impressive rate, especially after the pandemic. Hotels have been quick to tap into the potential of wellness offerings and have ramped up these services, which include diverse wellness offerings at existing hotels as well as launching wellness retreats. Wellness hotels worldwide recorded an impressive growth in 2023, although performances remained uneven across different wellness categories and hotel asset classes, a recent study has shown.

In 2023, TRevPAR of hotels with wellness offerings saw a steady climb, with minor wellness hotels (those generating less than $1 million of 10% of the total revenue from wellness and leisure) recording a 26% average rise in TrevPAR compared to 2022, according to the latest Wellness Real Estate Report by RLA Global, published in collaboration with HotStats.

Minor wellness hotels showed higher flexibility in optimizing operating expenses, contributing to their bottom line, RLA Global said. However, the performances indicated a fragmented hotel wellness market which investors should pay attention to.

Luxury hotels with major wellness offerings recorded three times more TRevPAR than upper upscale hotels, but was lagging behind upper upscale in YOY TrevPAR growth and posted a 4% slip in ADR, the survey found. Upper upscale hotels posted the best performance, in terms of ADR and TRevPAR growth in the major, minor and no-wellness category.

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Besides hotels, wellness services are becoming an integral part of branded residence projects as well.

“The emphasis in luxury is about protecting the experience first and foremost and sometimes that means sacrificing other things that might be more profitable. That would interfere with being able to deliver to your guests that very high-end, very exclusive and very personalized experience,” said Jeremy McCarthy, group director of spa and wellness at Mandarin Oriental.

Geographically, all the markets saw significant YOY improvements in TRevPAR, with growth ranging between +13% in the Americas to 48% in Asia Pacific. GOPPAR also saw a similar positive trajectory, with all markets recording steady growth. GOPPAR doubled in Asia Pacific, while Africa saw an increase of 25%.

Average F&B revenue per occupied room, saw a slight increase in all three categories in 2023, mostly driven by restaurant expenditure. However, beverage sales slipped at major and minor wellness hotels, which also saw their room service revenue decline by 13% and 12%, respectively.

Besides hotels, wellness services are becoming an integral part of value proposition of branded residence projects globally, the survey said. In its study of branded residence developments in Dubai, the survey found 10 key wellness facilities to be present in completed and pipeline projects — indoor pool, vitality pool, relax lounge, hair and nail salon, yoga studio, spa, sauna, spa treatment room, gym and outdoor pool.

The wellness real estate sector is one of the most lucrative real estate categories, with the global market totaling $438.2 billion in 2023, according to recent research by the Global Wellness Institute (GWI).

Between 2019 and 2020, wellness real estate was one of the few wellness sectors to record an impressive performance (21.6% growth), even as overall construction output and global GDP shrank (-0.8% and -2.6%, respectively). From 2019 to 2023, the wellness real estate sector maintained a strong average annual growth rate of 18.1%, compared to 5.1% average annual growth for overall construction.

The wellness real estate market is mostly concentrated in North America, Asia Pacific and Europe, with these three regions collectively accounting for 99% of the global market, the GWI study said. In 2023, North America was the biggest regional market and represented 44% of the global share.

Despite the considerable demand for wellness properties, global construction growth has been slowing, declining from 16.7% growth in 2020-21 to just 1.9% in 2022-23. GWI attributed this to the slowdown in global economic growth, a significant real estate crisis in China and a negative construction market growth rate in many regions, including Asia-Pacific (-1.3%), Middle East-North Africa (-2.2%) and sub-Saharan Africa (-7.6%).

Please click here to access the full original article.

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